India's dilemma

As expected, the belligerent policy followed by the US against Iran has come to bear a serious implication for India. The US has asked India to stop oil imports from Iran by November when the US sanction against the country comes into effect in full force. India, along with many other countries including some European countries which are traditionally close friends with the US, has been lobbying for a reprieve from the US sanctions ever since the Donald Trump administration decided to withdraw from the US-Iran nuclear deal of 2015 in May, earlier this year. All these countries have ramped up business deals with Iran after the 2015 pact between US and Iran that saw the lifting of US sanctions against the country. The current US administration is opposed to Iran's nuclear programme and wants an immediate halt to all nuclear activities in the country. As per Countering America's Adversaries Through Sanctions Act (CAATSA), any country dealing with a country against whom the US has imposed a sanction or is deemed to be an adversary of the US is liable to face similar sanctions. This, in effect, means that if India continues to do business with Iran, it may face similar sanctions from the US. India is the third-largest consumer of petroleum products after the US and China. Similarly, Iran is a key supplier of oil to India. Besides enhancing the procurement of oil from the country, India, in the recent years, was looking to enhance its investments in Iran in its bid to approach the Central Asian markets. It has also participated in the development of Iran's Chabahar Port that provides an easy link to Afghanistan and the Central Asian markets. Approaching these regions through Pakistan is easier but Pakistan has consistently denied India the access to these regions through its land or ports. An enhanced cooperation with Iran is necessary for India to bypass Pakistan and develop an independent business strategy to reach out to the untapped Central Asian markets. India has also inked MoUs to develop rail and road links from the Chabahar port to neighbouring countries. Now, all these MoUs and the idea to upgrade business relations with Iran will have to be shelved in view of the US sanctions against Iran. This not only upsets the Indian initiatives for the region but also obfuscates the hard work undertaken in that direction. Though the official response to the US demanding India to stop oil imports from Iran has been cautious and non-committal so far, it has started to work out plans for a situation in which India would receive no oil supply from the country. India has said that it would respond to the situation based on its national interest but it is not clear whether India would follow the US instructions or pursue an independent policy with respect to Iran. The US policy of sanctions does not end with Iran. Another important ally of India and a key supplier of oil and military hardware, Russia is also facing similar sanctions from the US and its European allies, which means India cannot procure oil and military equipment from the country beyond the limits prescribed in the US sanction. India procures over 60 per cent of its military hardware from Russia and has plans to buy S-400 air defence missile system worth $4.5 billion. The US has already cautioned India against going ahead with these purchases as they would attract the provisions of CAATSA and India can come under the range of US sanctions. Apart from sanctions through which the Donald Trump administration has embarked on a mission to reassert its predominant role in world affairs, the US has also launched various controversial policy measures to guard its business interests. It has imposed an enhanced tariff on the import of steel and aluminium from the European countries and China. In a similar move, it has introduced a higher tariff on various products imported from India. Though the affected countries including India have responded by imposing similar tariff hike on American imports, the protectionist US policy has forced its business partners to rework their policies. But they have fewer options as the US is not only the largest market for their products, but it is also the only superpower in the world, capable of protecting and promoting its interests. For India, it's time to follow a highly nuanced policy with both the US and Iran. As is clear from his engagements with world leaders, there is a difference in what US President Donald Trump says and what he means or does. He is known for using pressure tactics and it's possible that by November when the sanctions against Iran come into effect, he is able to make Iran fall in line.